In Appreciation: James M. Buchanan

The Nobel-winning economist who understood how politics really works.

James M. Buchanan, who died Wednesday at age 93, was one of history's greatest economists. Though he won the Nobel Prize in 1986, Jim at heart was always a farm boy from Tennessee—an old-fashioned, hardworking American who disdained unearned privileges as well as deeply distrusting the promises of politicians and the passions of collectives.

The theme of his life's work is best summarized in the title of his 1997 article "Politics Without Romance." With longtime colleague Gordon Tullock, Jim launched a research program—public-choice economics—that challenged the widespread notion that politicians in democratic societies are more nobly motivated and trustworthy than are business people and other private-sector actors. In a wide river of books and papers, Jim warned against the foolishness of romanticizing government.

Jim regarded his work as simply extending and applying the insights of America's founding generation, especially those of James Madison. Unlike too many pundits and professors over the past century—but like America's founders—Jim understood that politicians' lovely proclamations of their desires to improve society too often camouflage unlovely venal motives that prompt politicians to disregard the general welfare in order to transfer wealth and privilege to powerful interest groups.

Auto-company bailouts, Solyndra subsidies, farm programs, tariffs—the real and ugly reasons for these and many other government activities become clear after absorbing Jim Buchanan's lessons.

His deep skepticism of government, combined with his expert understanding of free markets, led Jim to describe himself as a "classical liberal." But it wasn't always so. Like many of his generation, the young Jim Buchanan was a socialist. His socialism was cured, though, by his studies in economics at the University of Chicago. While there, Jim polished his keen instincts for detecting nonsense.

Jim's nonsense-detection instincts are on full display in his 1958 book "Public Principles of Public Debt." By the 1950s most economists were trumpeting the Keynesian myth that government debt is no burden on future taxpayers as long as it is held internally—that is, as long as "we owe it to ourselves."

Wrong, said Jim. It is unfortunate that he is no longer here to speak out against the again-rampant Keynesians who advocate massive deficit financing. Misled by their own unjustified lumping together of taxpayers and domestic bondholders, Keynesians mistakenly conclude that government is exempt from the reality that counsels households and firms to follow prudent rules of finance. This Keynesian error is one that Jim never tired of challenging.

Not that Jim held much hope that his speaking out against unwise government policy would do much good. He sought to prevent harmful policies by tying politicians' hands rather than by pleading with politicians to be more public-spirited. And to tie politicians' hands Jim championed constitutional reform. He believed that only binding, enforceable constitutional rules can prevent Leviathan from eventually suffocating private markets and stamping out human freedom.

Ironically, the constitutional reform that Jim advocated practically requires the cooperation of the politicians whom he so distrusted. Yet it is a mark of greatness in Jim Buchanan that he held out hope, until his dying day, that clear-eyed scholarship would eventually persuade people of the dangers of unconstrained government and of the need to somehow rein it in.

Mr. Boudreaux is professor of economics at George Mason University and chair for the study of free market capitalism at the Mercatus Center.

The Non-Nobelist

NATIONAL REVIEW
September 25, 2006
THE NON-NOBELIST
But Gordon Tullock, maverick economist, deserves one
JOHN J. MILLER
Shortly after George Mason University opened its new law-school building a few years ago, then-governor of Virginia Jim Gilmore toured it. He asked to meet Gordon Tullock, a renowned economist on the faculty. Off a curving fourth-floor hallway, in Tullock’s freshly furnished office, the two men shook hands. “You’re the governor?” asked Tullock. “Good. Then maybe you can fix the leak in my ceiling.”
And that, in a nutshell, may explain why Tullock has failed to win a Nobel Prize in economics — an award he richly deserves, but one that has eluded him for decades. He is famously impolitic, and has developed a knack for provocation — a skill that can be either irritating or endearing. Whatever its effect, however, Tullock’s fondness for controversy is backed up by a daring intellect that cuts across disciplines and has shaped free-market thinking for more than a generation. “Gordon is one of the most original-minded persons in the world,” says Milton Friedman, who took home the Nobel in 1976. “I always thought it was a mistake not to let him have a prize.”
As the Nobel Foundation prepares to name this year’s recipient in October, it would do well to reconsider the case for Tullock. He has led an important and influential life, despite being constantly overlooked.
Tullock, now 84, was born and raised in Rockford, Ill. Although he attended the University of Chicago, he never formally received his bachelor’s degree because he objected to paying a $5 fee. “It doesn’t sound like a lot of money now, but it was to me back then,” he explains. This refusal didn’t stop him from entering Chicago’s law school, where he took his first and only course in economics. His teacher for that class was Henry B. Simons, a fierce critic of the New Deal and a founder of the fabled Chicago School — a group of professors and students, including Friedman, who would go on to win a dozen Nobels.
Tullock eventually earned his law degree and went into private practice. This lasted four months. “I participated in two minor court cases — I won one that I should have lost, and I lost one that I should have won,” he says. He then entered the Foreign Service and spent several years in China, Hong Kong, and Korea, sparking a lifelong fascination with international relations. He’s currently writing a book on the history of U.S. foreign affairs. “Since about 1890, our policies almost always have been wrong,” he says with a smirk — as usual, he’s seeking a reaction. He describes why it was a mistake to have intervened in the First World War and how Pearl Harbor might have been avoided. Then he suggests that it might be worthwhile, right now, for the U.S. to invade Brazil: “We could move into the jungle and develop it.” A couple of years ago, in fact, he drafted a paper urging this course of action. “I had the good sense not to give it wide circulation.” If nothing else, Tullock loves to start an argument — even one that guarantees he won’t ever win the Nobel Peace Prize.
Working for the State Department allowed Tullock to observe the operations of government up close. He was not enamored with what he saw, but the experience did give an idea for a book. He quit the diplomatic corps to write The Politics of Bureaucracy. As Tullock searched for a publisher, his photocopied manuscript found its way into the hands of Prof. James M. Buchanan, who was then teaching at the University of Virginia.
This was the start of a remarkably productive association. Buchanan invited Tullock to Charlottesville for a year-long fellowship. By the time it was over, in 1959, the two had agreed to collaborate on a book about the economics of constitutions and democracies. Curiously, Tullock doesn’t vote: “Anthony Downs [an economist] convinced me long ago that I stand a greater chance of being killed in a car accident on the way to the polls than I do of making a difference with my vote,” he says. “So why bother?” Tullock takes great pleasure in announcing this view — and on Election Day, friends enjoy attaching their “I Voted” stickers to his office door.Gordon Tullock/Darren Gygi
In 1962, Buchanan and Tullock released The Calculus of Consent, which explained how economic rules affect political decisions. The book is a founding text of public-choice theory, a powerful intellectual movement that analyzes why governments so often fail to achieve their goals. “It’s a classic,” says William A. Niskanen, chairman of the Cato Institute. Public-choice theorists view lawmakers and bureaucrats through the lens of classical economics: as rational deliberators acting on the basis of their own interests. By eschewing the naïve view of public officials as selfless benefactors of the public good, this approach has blazed new trails in explaining government dysfunctionality. Buchanan and Tullock shared a byline and described their partnership in a preface to Consent: “In the most fundamental sense, the whole book is a genuinely joint product.”
Yet in 1986, when the Nobel people decided that public-choice theory had matured to the point of deserving the prize, they gave it to Buchanan alone. He had certainly earned it, and his distinguished career included many books and papers that he had written by himself. At the center of his achievement, however, lay his work with Tullock. When National Journal asked Buchanan’s co-author about being skipped over, Tullock shot back: “I’m mad about it, to put it bluntly.”
The slight was both obvious and gratuitous: In the 36 years since the economics prize was first awarded in 1969, it has been shared 16 times. Some thought that Tullock was a victim of his background. Lacking any formal training in economics beyond that single law-school class, he was possibly seen as an interloper who didn’t truly qualify. Moreover, Tullock has been called a “natural economist,” meaning that he did not have to sit through hours of lectures to understand his discipline. Nor did he have to write a thick dissertation. His contributions to economics have come in the form of big ideas and deep insights, rather than the technical genius and mathematical rigor that increasingly dominate the field. Tullock himself thinks something else may have played a role: “I have no doubt that I was making a lot of nasty cracks about Sweden and its socialist economy in those days.” The Nobel Foundation, of course, is based in Stockholm.
By the time he had missed out on the big prize, Tullock was used to snubs. As a professor at the University of Virginia in the 1960s, he was turned down for promotion three times, prompting him to leave. “I could see they didn’t want me around,” he says. There’s a nomadic quality to his life, with its spells at the University of South Carolina, Rice, Virginia Tech, and the University of Arizona. His current appointment, at George Mason, is actually his second stop at the school.
Even if Sweden’s prize-pickers were to shed their presumed biases, it’s unlikely that they’d circle back to Tullock. They’ve already given an award for the ideas contained in The Calculus of Consent. But the case for Tullock doesn’t need to rest on this book alone, as his greatest contribution to economics may lie somewhere else entirely.
Tullock is the author of one of the most groundbreaking economics papers ever published: “The Welfare Costs of Tariffs, Monopolies, and Theft.” It explained that when individuals or groups try to gain economic advantages through the manipulation of government policy — lobbying to build trade barriers or legal monopolies, for instance — the costs of their activities are both high and hidden. They not only discourage competition, but also drive talented people into non-productive activities, as skilled managers devote themselves to winning new favors from government or defending the ones they already have. Today, this behavior is called “rent-seeking,” and it is of course deeply embedded in Washington’s political culture of earmarks and subsidies. In his paper, Tullock mischievously likened the whole enterprise to theft. “I try to raise eyebrows in everything I write,” he says.
Top journals refused to publish the paper. “It does not appear significant (as a theoretical contribution),” wrote the editor of The American Economic Review in a rejection letter. The Journal of Political Economy and The Southern Economic Journal turned him down as well. A less prestigious outlet, The Western Economic Journal, finally published it in 1967. Yet almost nobody noticed. “It went down the memory hole,” says Tullock. Then, seven years later, The American Economic Review printed an article by Anne Krueger on rent-seeking — she actually invented the term, and arrived at the concept with no knowledge of Tullock’s prior scholarship. All of a sudden, Tullock’s pioneering work began to receive attention. Rescued from obscurity, it has since been credited with helping overturn the once-consensus view that the social costs of government regulations are minimal.
Tullock never married and he has no kids, so what he will leave behind is his work. There’s an awful lot of it, and it covers a vast range of subjects: income redistribution, political revolutions, and even biology (he once wrote a paper on a bird called the coal tit). The Liberty Fund recently put out The Selected Works of Gordon Tullock, a ten-volume set that spans more than 4,000 pages. “I can’t complain about my career being blighted,” he says. “I’ve done very well.” He’s also done a great deal of good, for which the world should be grateful, regardless of what they say in Stockholm.